Income Tumbles at CHS Amid Depressed Commodity Prices

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04 Nov 2016 --- CHS, the largest farmer cooperative in the US, has reported that its full-year income has tumbled 46 percent, as it suffers the impact of lower commodity prices amid a global downturn.

Net income was $424.2m for the year ending August 31 while revenues were down 12 percent to $30.3bn.

Years of bumper crops have driven commodity prices lower and undermined farmers' incomes at CHS, which is owned by around 600,000 famers and operates grain elevators, retail outlets and fuel operations.

“Like others in our core businesses of agriculture and energy, the ongoing global downturn continued to affect both our earnings and revenues in fiscal 2016,” said Carl Casale, CHS president and chief executive officer. 

“Meeting the long-term needs of our owners and customers remains our priority as we continue to take prudent actions to ensure the company remains financially sound and positioned for future opportunities.”

In its Agriculture Division, which includes crop nutrients, renewable fuels, animal nutrition and sunflower processing and food ingredients, earnings were $30.9m, down 79 percent on the year. 

This included the impact of a $116.5m impairment charge after it axed the development of a $3.3bn nitrogen fertilizer plant in North Dakota and instead opted to invest $2.8 billion in a stake in fertilizer maker CF Industries.

Within its Agriculture Division, revenues in Food Ingredients and Processing were down by $56.6m compared to the year previous, partly down to lower margins in its soybean crushing business.

Across its Energy division, earnings were down 49 percent to $275.4m, due to lower margins at its two refineries while revenues across its Transportation Division were also down.

However, one bright spot for CHS was its Foods division, which reported a three percent uplift in income to $62.3m, as it benefited from its investment in Ventura Foods.

“As fiscal 2017 unfolds, CHS will sustain its focus on its financial and operational priorities. This includes always putting safety first and taking mindful steps to maintain balance sheet strength and profitability,” Casale added. 

“We'll continue to manage expenses and staffing prudently, while making investments in necessary maintenance and essential operational upgrades and ensuring assets deliver appropriate levels of return.”

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CHS

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CHS Inc. (www.chsinc.com) is North America’s leading farmer owned cooperative and global agribusiness owned by farmers, ranchers and cooperatives across the United States. Diversified in energy, grains and foods, CHS is committed to helping its customers, farmer-owners and other stakeholders grow their businesses through its domestic and global operations. CHS, a Fortune 100 company, supplies energy, crop nutrients, grain marketing services, livestock feed, food and food ingredients, along with business solutions including insurance, financial and risk management services. The company operates petroleum refineries/pipelines and manufactures, markets and distributes Cenex® brand refined fuels, lubricants, propane and renewable energy products.

CHS products include refined vegetable oils, soy and wheat flours, textured soy protein, and specialty soy protein products. We also supply confectionary sunflower seeds, along with other small grains and processed nuts ingredients. Packaged foods for retail, foodservice and institutional markets are manufactured and distributed through Ventura Foods, LLC, a leading U.S.supplier of edible oil products and a 50/50 joint venture between CHS and Mitsui Co Ltd.

Branded products include:
Savorysoy® soybean salad oil
Honeysoy® soy flour and flakes
Ultra-Soy® and unflavored and flavored textured soy protein
Q isolated proteins
Agway® confectionary sunflower seeds
Marie’s® salad dressings and Dean’s Dips® consumer brands

We enjoy working with our customers to meet their specific needs, focusing on adding value to every customer’s business. And because CHS is owned by farmers, we are connected to commodity markets on a daily basis and can help manage risk for our customers. Ask about our supply chain management and commodity market advisories.

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